DER SPIEGEL Bail-Ins: EU Deal Protects Taxpayers in Bank Bailouts

 

“Any man who thinks he can be happy and prosperous by letting the Government

take care of him, better take a closer look at the American Indian.”

Henry Ford

 

 

 

 

 

DER SPIEGEL  June 29, 2013

Under an agreement reached early Thursday, European banks, their investors and depositors will be required to cover at least 8 percent of potential losses before governments step in with aid. It is a major step forward for the planned European banking union.

In the future, European banks, their owners and their creditors will be held accountable should financial institutions collapse — and not just taxpayers.

European finance ministers on Thursday agreed to a deal that would require owners, creditors and depositors — in that order — to cover the expenses of bailing out or winding down failed banks. The reform marks another step towards a euro-zone banking union.

“We came to political agreement,” German Finance Minister Wolfgang Schäuble said early Thursday morning. He said the reforms were an “important step,” noting the shareholders and creditors would be “liable first and foremost.”

 

Under the so-called “bail-in” deal, the result of what Schäuble described as “quite difficult and intense” talks, states would only intervene to rescue banks after all other actors, including depositors with more than €100,000 in their accounts, had participated to an extent representing at least 8 percent of total liabilities. The deal also would require member states to set up “ex-ante resolution funds,” that would hold a sum equal to 1.3 percent of a nation’s insured bank deposits. The banks themselves would be required to pay into these funds, but payouts in interventions would be cappped at 5 percent of a bank’s total liabilities and would require approval from the EU in Brussels.

 

Germany Says Deposits Are Safe

 

With the new rules, the 27 EU member-states want to prevent taxpayers from getting stuck with the tab when financial institutions fail, as frequently happened during the recent global financial crisis. Schäuble said that depositors with less than €100,000 in their accounts would have nothing to worry about and that deposit guarantees would protect them not only in Germany, but also across the EU.

 

Meanwhile, Dutch Finance Minister Jeroen Dijsselbloem, who is also the head of the Euro Group, said the rules would lead to more responsible behavior on the part of banks. Irish Finance Minister Michael Noonan described the deal as “a major milestone in our effort to break the vicious link between the banks and the sovereigns.” “Bail-in is now the rule,” he said.

 

The member states will now have to negotiate the new rules with the European Parliament, a process that could take until the end of the year. The deal also provides member states with wide-reaching powers of intervention when financial institutions founder. For example, it would permit smaller banks to be closed in the future under standardized European regulations. The rules on bail-ins would only be applied to larger, systemically relevant banks that are in need of restructuring and are closely interlinked with other banks.

 

Out of fear of a devastating chain reaction, the EU member states bailed out faltering major banks in 2008 to the tune of hundreds of billions of euros. The first instance in which investors and creditors were forced to make a major contribution was this spring in the bailout of Cyprus. The new EU rules would mark a major shift in policy.

 

Resistance in Berlin

 

Germany, the Netherlands and other countries had pushed in negotiations for a far-reaching bail-in on the part of creditors and for the most unified rules possible. France had fought for greater leeway at the national level and the ability for the state to intervene at an earlier stage in a crisis situation. French Finance Minister Pierre Moscovici said it was crucial now that the permanent euro bailout fund, the European Stability Fund, had a role in financing bank bailouts defined in the new rules.

The Brussels meeting was the second after negotiators broke off talks on Saturday after more than 20 hours without a deal. Member-states had pledged to agree to the most important building blocks for a euro-zone banking union by the end of June. They had already agreed on a centralized European banking supervisory authority for the euro zone under the jurisdiction of the European Central bank. With the deal on bank resolution, a further pillar has been erected. But at least one important element — deposit insurance — remains to be negotiated.

 

At the EU summit on Thursday and Friday, European leaders are expected to push for further steps. Next week, the European Commission is to present a draft proposal for a single resolution system for the euro zone that would better integrate national resolution funds financed by the banks. The issue has already been a source of conflict between member states. Germany, for example, is opposed to the kind of centralized European fund that might see German savings banks forced to participate in the bailout of a major French bank.

 

dsl — with wires

a little about me and my expertise – video

 

LAND SPECIALIST – LAND EXPERT – INVESTMENT BROKER – ARIZONA

https://www.youtube.com/watch?v=PPs3kpKR4nY

 

LAND SALES IN PHOENIX from 4-10-2013

http://walter-unger.com/?p=7956

 

Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Investment Properties in Phoenix.

 

 

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Walter Unger CCIM, CCSS, CCLS

I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial and  Landspecialist in Phoenix and a Landspecialist in Arizona.

1.

WHETHER YOU LEASE OR OWN

NOW IS THE TIME FOR YOU TO EXPAND, UPGRADE OR INVEST.

 

In my opinion we are at bottom of the cycle in Commercial Real Estate in Phoenix, so there is only one way and it’s called we are going up again and now is the time for you to expand, upgrade or invest in Commercial Properties in Phoenix.  The prices on deals I may get you will not be around forever.

 

2.

IF YOU OR ANYBODY YOU KNOW IS IN TROUBLE WITH YOUR BUSINESS, AS MANY AMERICANS ARE IN THE MOMENT, AND ARE ABOUT TO LOSE YOUR COMMERCIAL PROPERTY, PLEASE CONTACT ME.  IF YOUR BANK IS BEHAVING BADLY I MAY BE ABLE TO HELP YOU GET OUT OF SOME OR MAYBE A LOT OF FUTURE HEADACHES.

 

3.

WAITING TO SELL YOUR LAND ? TIMES CHANGE / IT’S TIME

  We barely could give land away the last few years, but times are changing.  Even in those meager years, I sold more land across the state than most other brokers. Before the real estate crash I was a land specialist in Arizona with millions of dollars of transactions, but then I had to change and also sell other commercial investment properties, which was fun, but I am a Commercial Landspecialist in Arizonal, a Commercial Land Specialist in Phoenix and love to sell land, one acre to thousands of acres.

Since I was a Land Specialist in Arizona and a Land Speciaost in Phoenix many of my clients, Sellers and Buyers remember me and now they are calling me again, so this is the time to get back into land and none of my clients, including future clients, will miss out on getting their best deal.

Also, if you are up-side down on your land, like many Americans, and the lender is giving you a hard time, now is the time to put your land on the market. Lenders are making deals now with short sales.  I have been working with banks for many years – I learned how to work with them.

 

If you have any questions about the 1 to  3 above, about Commercial Investment Properties in Phoenix or Commercial Investment Properties in Arizona,  I will gladly sit down with you and share my expertise and my professional opinion in Commercial Properties in Phoenix or Commercial Properties in Arizona with you.Obviously I am also in this to make money, but it could be a win-win situation for all of us.

 

Please reply by e-mail walterunger@ccim.net or call me 520-975-5207 (cell)  602-778-5110 (office direct).

 

www.Walter-Unger.com

 

 

 

Thank You

Walter

 

Walter Unger CCIM

Associate Broker

Kasten Long Commercial

2821 E. Camelback Road, Suite 600

Phoenix, AZ 85016

Cell:      520-975-5207

Direct:   602-759-1202

Office :  602-445-4141

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